Members, remember to request access to @pebbletrades if you’d like intraday notices of important updates. Only about 20% of you are currently signed up, and I’d like to use it more often to signal when important target tags or changes to a forecast occur. If your identity isn’t discernible from your Twitter handle, drop us a line so we’ll know to approve you.
* * *
SPX/ES backtested their necklines in dramatic fashion yesterday. As we discussed, they had their choice of a gentle sloping path (which stretched to Wednesday or Thursday) or a sharp plunge.
SPX opend off 13 points and never looked back. The losses accelerated until it reached our downside target and VIX reached our 21 target — also a backtest.
The swift recovery in the closing hour and the overnight ramp job send the message that the worst is over for now. But, of course, we’ll want to see some follow through for confirmation.
continued for members…
Important to keep an eye on VIX 5-min chart, which is set up for a breakdown or bounce.
The backtest of the broken white channel was textbook and suggests new lows — as long as that TL above breaks down.
RB and CL are hinting at a breakdown – a negative for stocks.
And, USDJPY and EURUSD continue to support DXY.
As we discussed last night, SPX’s purple channel looks like the more legit one going forward. But, as we also discussed, a SMA10 backtest is sorely needed. ES came close after its SMA10 was adjusted after the fact.
But, SPX’s is way down at 2610.09, well below the neckline. So, we shouldn’t be shocked if SPX puts in a lower low or goes sideways until its SMA10 pops up above the neckline at 2622ish.
ES has broken out of the falling white channel and sort of backtested it. It would look stronger with a tag of the red TL as well.
Note that AAPL has broken down somewhat. If its SMA5 200 doesn’t hold, we could see several percent off the top as it backtests the broken white channel.
And, even COMP fell back into the megaphone from which it broke out. It might re-break out on the open. But, if not, this is a warning sign. 
Our yield curve model turned bearish yesterday with the break above the red TL, but just as quickly came back to neutral on a backtest. Anything other than sideways would be bearish at this point.
Even though TNX broke out of its falling white channel, it continues to look susceptible to a drop to the .618. I assume this will occur around the upcoming FOMC meeting. 
UPDATE: 10:33 AM
Not a good development for the bulls…VIX has popped back above its TL, ES has reentered the falling white channel and SPX has dropped through its SMA5 200.
Note that the 2s10s is hanging by a thread.
UPDATE: 11:28 AM
VIX is back to the rising channel bottom – another backtest. 
Remember, we have MUCH higher targets available if it breaks out.
Good downside potential to the SMA10, but again, it might just be marking time for the SMA10 to rise above 2622. Stay focused on VIX.
COMP is hinting at a breakdown.
UPDATE: 3:11 PM
SPX is trying to recover, aided by the usual suspects. It reached 2612.86, a little below what the SMA10 will be tomorrow (2815ish.) Yes, it’s dirty pool. But they sometimes pull this crap. Just be aware that the downside potential is still very much alive and VIX could tell a completely different story after hours.
I have some errands to run, so I’m going to sign off for the night.
GLTA.